Universal Life Insurance (UL)

Universal life insurance is a type of permanent life insurance that offers flexible premiums and an adjustable death benefit. Policyholders can increase or decrease premiums within limits, and accumulated cash value earns interest at a declared rate (with a guaranteed minimum). The policy's cost of insurance (mortality charges) and administrative fees are deducted monthly from the cash value, with the remainder earning interest. Universal life is more flexible than whole life but requires active management — if cash value is depleted by insufficient premiums, low credited interest, or rising costs of insurance, the policy can lapse. Variations include indexed universal life (IUL, market-indexed credits) and guaranteed universal life (GUL, no-lapse guarantee).